CCS LEGISLATION ADVANCES IN CALIF. SENATE

Tamar Hallerman
GHG Monitor
4/26/13

Carbon capture and storage legislation advanced in the California Senate this week as supporters continued to argue that the bill would fill gaps in the state’s regulatory regime. Members of the Natural Resources and Water Committee easily passed the measure, S.B. 34, on an 8-0 vote April 23, subsequently sending the bill to the Senate Appropriations Committee, which is expected to consider the measure in the coming weeks. If the measure passes the Senate Appropriations Committee—the third and final panel in the upper house that must greenlight the measure—it would then move toward consideration from the whole Senate.

Supporters have said that the measure is long overdue. “S.B. 34 fills in some glaring omissions on accounting for emission reductions and regulatory responsibility [under California’s climate law, AB 32], which [state] agencies have acknowledged need to be filled in,” Sen. Ron Calderon (D), the bill’s sponsor, told the resources committee ahead of its vote. “It also adds California-specific safeguards to how the practice is regulated.”

A broad coalition of stakeholders also spoke in favor of the measure prior to the committee vote, including the Environmental Defense Fund, the California Chamber of Commerce and the Western States Petroleum Association. Natural Resources Defense Council Scientist George Peridas said in his testimony that the bill would help clear the way for the development of CCS projects in California while providing additional environmental safeguards for the CO2 as it is injected underground. “We believe that California has the elements to incentivize more deployment of this technology, but the reason you haven’t seen more of it is because the policy pieces and price signal aren’t in place,” Peridas said. “California has climate policies and greenhouse gas reduction goals that could result in the deployment of the technology.”

Bill Aims to Clarify Regulatory Language

At its core, S.B. 34 aims to clarify subsurface pore space ownership and patch regulatory gaps for the permitting of CCS and enhanced oil recovery projects within the state. “Despite the existence of comprehensive federal CCS regulations, impediments to the deployment of CCS technology in California remain, including specific gaps in California laws and regulation,” the text of the legislation states. The bill would also clarify the state authorities for CO2 transport and storage permitting and put pressure on the California Air Resources Board (ARB), the state agency in charge of implementing and overseeing AB 32, to list CCS as an eligible emissions-cutting technology under AB 32 by 2016. “This bill tells ARB to create a quantification methodology with safeguards that would say that based on this methodology, if your project has permanently stored 1 million tonnes of CO2, then you could reduce your [carbon] allowance obligation by that much,” California CCS Coalition Executive Director Pete Montgomery said in his testimony. “Absent that methodology, you’re not able to get credits or allowance reductions under that regulation.”

The legislation borrows heavily from the December 2010 policy recommendations of the California CCS Review Panel, a group of stakeholders commissioned by several state agencies that focused on the challenges the CCS industry faces specifically in California. The group called for “clear, efficient and consistent regulatory requirements and authority” for the permitting of CCS, as well as consistent standards for the geologic storage of CO2 and measuring, monitoring and accounting protocols, among other recommendations.

Sierra Club Links CCS to Fracking

The only group to formally speak out against the legislation at the committee hearing was the California chapter of the Sierra Club. In remarks to the committee, Director Kathryn Phillips said the bill should not advance because it would mainly be used to develop enhanced oil recovery projects, “which seems contrary to the requirements and the spirit of AB 32.” Phillips said she was also concerned that passing the bill would shift resources within ARB that would make the agency less effective in its other areas of responsibility. “We’d like to see them putting more effort into some other areas that would provide benefit to the public sooner and faster,” she added.

Phillips linked CO2 storage with the controversial natural gas extraction technique of hydraulic fracturing. “We’re in a period right now where we’re trying to figure out what to do with fracking [in California]. CO2 is used in conjunction with other things in hydraulic fracturing. It seems like putting this bill forward now essentially ‘fracks’ the effort to find a better way to deal with hydraulic fracturing,” she said.

Supporters of the bill were quick to question Phillips’ linkage between CCS and fracking. “The reality is that they’re completely different processes. … It’s a little bit sensationalist to bring up what’s really a hot topic—fracking—with this bill because they’re not [linked],” Montgomery said. Calderon also aimed to separate the two. “I just don’t understand the objection that the Sierra Club has,” he said. 

California Emissions Reduction Goals Among Nation’s Highest

Under AB 32, California adopted some of the nation’s most ambitious emissions reduction goals. The state is aiming to reduce greenhouse gas emissions to 1990 levels by the end of the decade and 80 percent below 1990 levels by 2050. A portion of the landmark law mandates the creation of a statewide cap-and-trade scheme, which kicked off in January and has to date gone through two rounds of quarterly auctions.

While California has repeatedly identified CCS as a key solution to help the state reach its emissions reduction goals, little action to reduce deployment barriers has occurred to date. Only one CCS project is currently moving forward publicly in California—SCS Energy’s 390 MW Hydrogen Energy California gasification project. The project is waiting for permission to construct from the state, and is set to begin a series of public hearings with the California Energy Commission and Department of Energy this summer. Company officials say they hope to make a final investment decision on the project, which also has an EOR component, by year’s end.